At AWG, we are frequently asked about the best practices for internal financial management reporting for wineries. What is the right amount of reporting that doesn’t create too much paperwork? How much time should you spend making and editing reports?

From my thirty years of accounting and finance experience in the wine industry, I can offer these guidelines for the financial reporting for small and midsize wineries.

Financial statements and reporting

Here’s a breakdown of the best financial statements and reporting practices throughout your fiscal year.

Monthly

5th of the month: Report your prior month’s revenue including case sales and all Costs of Goods Sold (COGS) for each distribution channel.

15th of the month: Report profit & loss by department. Invoices can be slow to come in so you need to keep your AP report open until have been received and processed.

20th of the month: Report budget vs. actual results by department.

Quarterly

30th of the month: Create full financial statements with a complete cost accounting performed to the gallon and case level. Your quarterly financial statements should include a balance sheet, income statement, and a statement of cash flows. You should also include supporting schedules such as sales by SKU by channel, AP and AR registers, gallons and cased goods inventory, profit and loss by department, and budget vs. actual results by department.

Annually

Day 60: Perform a full year-end close and publish year-end financial statements.  Send all year-end accounting data to your tax CPA. Decide whether you are going to file your taxes on time, or if you are going to extend your return. If you decide to extend, set a deadline of May 31 for both your internal accounting team and your tax CPA firm. This deadline will help to ensure your taxes are given the full attention needed and are not competing with all of your CPA’s other clients for filing.

Budgeting & Forecasting

The building blocks of the financial reporting for your winery is your budgeting and forecasting. Here’s how to set yourself up for success when creating your budget and forecasting predictions during your year-end reporting.

October

In mid-October, review your prior trailing twelve months accounting data, from Q4 prior year through Q3 current year.  Use this information to prepare your upcoming one-year and five-year financial budgets and forecasts. Your one-year budget is performed at general ledger account level. Your five-year forecast is performed at a higher-level using sales, production, and spending trends.

November

Once you have drafted your budgets and forecasting reports, send them to each department manager for revision. Adjust your reports as needed based on the feedback you receive from each department.

December

In December, you should finalize your one-year budget and five-year forecast. Your one-year budget should be entered into the accounting system as a static report. Your five-year forecast should be regularly maintained and updated as your quarterly financial information is recorded.

For example, if a pandemic hits in March of a given year, you would want to know how your original budget for that year will be affected, but you also want to revise your forecast based on the new information.

If cash flow is a concern, the dynamic forecast file is the best way to monitor your cash flow month-to-month.

Final Thoughts

As a Client Accounting Services firm, we are trained to make sure our reporting is accurate. Oftentimes we could report faster because we know 95% of the information and we can estimate the last 5% with a high degree of precision. However, accountants have a tendency to forget that the rest of the management team is flying blind until we provide them with data. 

My recommendation: report early, report often, disclose what you know, and what has been estimated. The management team needs your data in order to make critical decisions which affect their departments and your organization.